Today on GBPUSD – Daily and H4 charts support Short trades, but…

On the Daily chart above, we would observe the GBPUSD currency pair has been in a steep downward trend since Wed. 20th January, after hitting the upper edge of an upward or bullish channel. Currently, the bears have reached the lower edge of the channel, which, under normal circumstances, we would expect to act as a strong support area – especially with it coinciding with a strong support level: the most recent Daily swing low @ 1.5849 (which we’ve highlighted using the blue broken line).
However, earlier price action today saw price breaking below the 1.5849 level, and that weakens the notion of the bulls’ momentum being reduced by the lower edge of the bullish channel. Consequently, while keeping in mind possible bullish retracement, our bias, from a day trade perspective, continues to support the bears. Today’s candle close should give us a clearer picture of the direction price might be heading next.

On the H4 chart above, price broke the most recent swing low @ 1.5902 (which we’ve highlighted using the upper blue broken line) downward. That automatically sustained our bias in favor of a downward price move. The 1.5849 support level (that we’ve highlighted using the lower blue broken line), which we discussed on the Daily chart (together with the lower edge of the Daily chart bullish channel) is also seen on the H4 chart. The 1.5849 is a level we would prefer to see price break below decisively to be more convinced of the bears resolve to keep controlling price movement.
The white horizontal line @ 1.6069 highlights the most recent swing high, and as long as price stays below it – in the absence of any new and lower swing high – our bearish or downward bias remains intact.

However, in case we eventually have a clearer coast, we still need our Hourly charts – using Fibonacci retracement levels and important resistance levels – to seek promising areas to take our Short positions. Price pattern on the Hourly must also be forming lower highs and lower lows. Please note that our aim is to sell a rally in today’s down-trend.

Also, PATIENCE is the key here: we need to patiently wait for the Hourly retracement. It might happen, and it might not.